EGBs-GILTS CASH CLOSE: Gilts Weaken Again As PMIs Surprise To Upside

Broadly stronger-than-expected flash November PMIs saw European core yields rise sharply Thursday, with Gilts underperforming.

• While German / Eurozone PMIs came in above consensus after France's below-expected numbers, the UK's comfortable beats (including an unexpectedly expansionary Services reading) was arguably the highlight and helped Gilts underperform, following Wednesday's larger-than-expected Gilt supply remit.
• Bund yields hit session highs in mid-afternoon after news emerged that the German government would indeed seek to suspend the "debt brake" for 2023 (later confirmed by the finance ministry).
• The Dutch short-end weakened on post-election result fiscal questions.
• UK yields rose by double digit basis points across the curve, moreso than Germany which saw bear steepening amid limited short-end moves.
• Periphery spreads widened modestly, with BTPs underperforming.
• Friday brings German GDP and IFO data, with a few ECB speakers including Lagarde.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1bps at 3.044%, 5-Yr is up 5.1bps at 2.596%, 10-Yr is up 5.9bps at 2.619%, and 30-Yr is up 5bps at 2.788%.
• UK: The 2-Yr yield is up 10.3bps at 4.716%, 5-Yr is up 11.1bps at 4.309%, 10-Yr is up 10.2bps at 4.257%, and 30-Yr is up 9.8bps at 4.723%.
• Italian BTP spread up 1.5bps at 177.1bps / Spanish up 1bps at 100.3bps